Nicky Owen, partner and Head of Professional Practices at Crowe:
In a “changing world” it was disappointing to see that the Chancellor has not listened to UK businesses and that there was no U turn in the changes to employers NIC that take effect from 6 April 2025. The NIC changes will impact businesses and will stifle much needed growth in the British economy. Businesses have already started reining in costs and looking at ways to reduce the workforce. This will have an impact on working people and the availability of jobs. A growing economy would bring in much needed increased tax receipts.
I am all for limiting and restricting tax evasion. However, I am concerned whether we have enough technically skilled people to run and deal with the investigations in a timely basis. An enquiry needs to get to the issue quickly and be dealt with promptly and not to leave taxpayers waiting for responses months on end because there isn’t a technically qualified individual that understands the issue. AI will assist in the process but again skilled people will need to analyse the results.
Johnathan Dudley, Partner, Head of Manufacturing
The Chancellor confirmed more money in defence spending, with the implication that more will be spent here in the UK, (as well a doubling down on the drive to build more homes by reforming the planning process) to drive economic growth and put more money into the pockets of ‘working people’.
The timing of this spend; and its effect, is conceded as a matter for the future though, and hard pressed manufacturing and engineering businesses will have seen little relief against the pressure of spiralling energy costs, the threat of increased rates bills and of course, the significant rises in employment costs,( through living wage differentials, NIC costs and the effects of the employment rights bill), all of which are now imminent.
Theres a real need now for businesses to take early advice, and take action to weather the ‘cost storm’ long enough to play a part in the creation of the UK as a ‘Defence Industry Superpower’ as the Chancellor envisages.
In addition, transitioning to the defence supply chain isn’t easy. There are clear supply chain issues and clearances involved
Increases in home building should also drive manufacturing growth in the relevant supply chain and this will also ‘trickle down’, economically, if the supplies are kept in the UK. However, the stated timeframe is again in the future, as is the third runway at Heathrow, mentioned again in the speech.
In reality, against halved growth predictions from the OBR in 2025, UK manufacturers need more incentives this year, to avoid taking decisions that will be contrary to the Chancellor’s drive for growth.
Stuart Weekes, Partner, Corporate Tax
It is welcome news that the government is finally looking to bring in a system of advance assurance for R&D tax reliefs. The current experience of companies that genuinely believe they are carrying out R&D tax credits is very negative especially when faced with an HMRC enquiry. But will the advance assurance process that the government proposes meet their objectives of bringing certainty for customers and improving their experience as well as reducing error or fraud? The government consultation runs until 26 May 2025 so taxpayers and advisers have the opportunity to contribute their ideas.
It is however disappointing that the government has not launched a review of whether the UK’s R&D tax credit scheme is competitive compared with other countries. The UK’s headline rate of credit is lower than other countries in Europe. Will this entice UK companies to consider relocating R&D activity overseas? Proper investment in these UK tax credits will encourage innovation among UK companies and give a boost to growth.
Simon Crookston, Partner, Corporate Tax
The Chancellor Rachel Reeves announced several times in her Spring Statement that the world has changed, although unfortunately she didn’t take the opportunity to change the corporate tax system to help stimulate the UK’s stagnating economy.
With global trade wars potentially afoot, it is a real shame that the Chancellor did not acknowledge the changing world for UK businesses and announce a suite of incentives and investment reliefs to provide a direct boost for the UK’s 5.5 million private sector businesses. A reduction in the corporation tax rate would also have been welcomed.
The government have previously pledged to ‘Put more money in the pockets of working people’, but this was certainly not a Spring Statement that achieved that objective.
It is a real shame that the Chancellor did not provide incentives to encourage further investment in green initiatives which are accessible to all. This would have helped stimulate growth and the economy. We need to radically change our approach to environmental and sustainability matters to reach the Government’s net zero targets.
While energy transition and net zero is a key priority for the government, second only to economic growth, the Chancellor seems to have ignored these targets in her Spring Statement.
Jane MacKay, Partner, Corporate Tax
It was great to hear the Chancellor’s announcement about the investment in infrastructure, building and defence technology businesses. It’s evident that investment is needed to restore the UK’s crumbling infrastructure and it’s essential for economic growth.
The Chancellor insists that Labour’s tax changes do not amount to tax rises for working people days before the 2% increase to employer NIC comes in, when we all know that these increases have already meant lower pay rises and a reduced number of jobs in people intensive service businesses, like cafes and pubs.
There were no tax changes announced by the Chancellor’s Spring Statement today but we are still getting to grips with the changes announced in October which were significant. One of these changes is a major reduction to Inheritance Tax relief on shares in many trading businesses. For the millions of family-owned businesses, which are essential to the UK’s economic growth, the coming year gives a short opportunity to make their plans for succession before 5 April 2026, or otherwise potentially face a huge IHT bill on their business in future.
Robert Marchant, Partner, Head of Tax
Growth is the Chancellor’s “number one mission” but, other than organisations in the defence sector, many may be disappointed that there was very little in today’s Spring Statement to help them to grow. There are fiscal levers the Chancellor could have used such as providing businesses with access to finance for capital investments, making the UK more attractive to the wealthy and boosting the UK’s stock markets, and it will be interesting to see whether there are changes made in these areas in the future.
Successive governments have promised to cut tax evasion and avoidance but is anything really changing? Today’s Spring Statement included a further commitment in this area, which at a headline level is clearly welcomed, but the key will be whether it can actually be delivered upon. I’d like to hear more about how HMRC will do this.
